IPS / Lighthouse Insurance Group Blog: hb4595

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On July 11, 2012, we posted a blog announcing the law that adopts positive changes to Michigan’s credit based insurance scores. This article contains more specific information about what this new law will do for you when it takes effect in April 2013.

Michigan does not allow an insurance company to deny insurance or surcharge premiums because of credit based insurance scores. Rather, they can only offer a discount off of their standard rates for a policyholder who has a good insurance score. But make no mistake! There can be a substantial premium difference based on a person’s insurance score. And, to keep it confusing, each insurance company creates their own model (uses the elements within a credit score that they want to look at), and the model can vary from one type of insurance to another being offered by the same insurance company! In other words, your insurance score is likely to be different from insurance company to insurance company, and it could be a different number for an auto policy than it would be for a homeowner policy offered by the same insurance company. This new law provides some solid guidelines that all insurance companies will need to follow for Michigan policyholders.

According to the Michigan Association of Insurance Agents (MAIA) the new legislation will:

Prohibit insurers from using the negative factors in insurance scores such credit inquiries not initiated by the consumer, credit inquiries related to insurance coverage, collection accounts with medical codes, and multiple mortgage or automobile lending inquiries;

Allow policyholders to request a review by their carrier of Extenuating Life Circumstances such as the loss of employment or ID theft that might negatively impact their score;

Not penalize someone for the absence of credit information;

Require insurance companies to disclose to consumers that credit information is considered when determining premiums;

Allow policyholders to request a review of their insurance score at the time of their annual renewal; and

Require insurance companies to re-rate a person and to provide a refund to someone who has successfully challenged an error in their credit history.

For more information on your insurance policy or insurance scoring, call Insurance Planning Service at 800-225-5582 or use our online contact form today!

Michigan Governor Rick Snyder has signed a series of bills that will help insurance consumers by providing additional protections regarding the use of credit-based insurance scores, according to the Property Casualty Insurers Association of America (PCI).

"This is an important victory for consumers," said Jeffrey Junkas , regional manager for PCI. "Insurance scoring has been shown to benefit consumers and Michigan has strengthened it law by adding protections for individuals experiencing extraordinary life circumstances based on the National Conference of Insurance Legislators model act. This approach to insurance scoring is well established and brings Michigan into the mainstream as most state laws or regulations are based, in whole or in part, on the NCOIL model."

The package of insurance scoring bills (House Bills 4593, 4594, 4595, 4596 and SB 300) had broad bipartisan support. Michigan is one of the few states where insurance scoring is used only to provide discounts for insurance customers. Credit-based insurance scores are not used in Michigan to apply a surcharge or to determine whether a person can be insured by a company.

"Governor Snyder and legislative leaders are to be commended for working together across the aisle to advance these bills," said Junkas. "Insurance scoring works well for consumers in Michigan and with these changes it will provide another layer of safeguards."

Across the country the trend toward fewer insurance scoring bills continued. This year insurance scoring legislation advanced in only two states, Kentucky and Michigan. Both states made positive improvements by adopting NCOIL's extraordinary life circumstances language.

For more information on your insurance policy or insurance scoring, call Insurance Planning Service at 800-225-5582 or use our online contact form today!